Sunni militants are consolidating their hold on a swath of Iraq & now threaten the integrity of the Iraqi state, military & intelligence officials said. The
main insurgent group, ISIL, is gaining strength thru a Sunni
uprising against the Shiite-led gov. ISIL now controls most of a “central swath” of Iraq, is “solidifying gains” & poses “a legitimate threat to Baghdad, according to the Defense Dept. The
militants “are killing and maiming, but they’re also grabbing ground,” & “they are behaving like an organized force.” The
dire assessments point to the challenge that the Iraqi gov faces, even with potential US airstrikes, in trying to defeat a few
thousand ISIL fighters bolstered by thousands more disaffected Sunnis,
captured weapons & money from looting banks & extorting businesses.
ISIL’s advance threatens Iraqi military control of the large Balad air
base northwest of Baghdad. The situation looks grim.

The US economy contracted in Q1 by the most since the depths of the last recession as consumer spending cooled. GDP fell at a 2.9% annualized rate, more than
forecast & the worst reading in 5 years,
after a previously reported 1% drop, according to the Commerce Dept.
It marked the biggest downward revision from the agency’s 2nd GDP
estimate since records began in 1976. The revision reflected a slowdown
in health care spending. Consumers returned to stores & car dealerships,
companies placed more orders for equipment & manufacturing picked up
as temperatures warmed, indicating the early-year setback was temporary.
Combined with more job gains, such data underscore the view of Federal
Reserve policy makers that the economy is improving & in less need of
monetary stimulus.

Orders for US business equipment
climbed in May, showing corp investment is helping revive
the economy after a slump at the start of the year. Bookings for non-military capital goods excluding aircraft
rose 0.7% after a 1.1% drop in Apr, according to the Commerce Dept. Demand for durable goods, meant to last at least 3 years,
decreased 1%, reflecting declines in the volatile
transportation & defense categories. Companies are expanding capacity as the US bounces back from Q1 contraction that was
the worst in years.

Gloomy news out of Iraq did not deter stock buyers. The downward revision on GDP data is old news, but serves as a reminder that the underlying strength of the recovery is fragile. Maybe when oil has another leg up, the ugly situation in the Iraq region will get more attention.